Ron Paul: Fed May Not Hike Because 'Everything Is Vulnerable'
Image: Ron Paul: Fed May Not Hike Because 'Everything Is Vulnerable' (Dollar Photo Club)
By FJ McGuire | Sunday, 16 Aug 2015 08:14 PM
Former Rep. Ron Paul, R-Texas, warns that Federal Reserve Chairman Janet Yellen won’t raise interest rates this year, defying public expectations, in the wake of China’s currency devaluation.
"She's going to be more hesitant to raise rates because she sees how fragile the global economy is," Paul told CNBC. "She's under the gun," he said. "I could be wrong, but I don't think they are going to raise interest rates," he said.
"Everything is vulnerable, so we're living in very dangerous times," Paul added.
Financial markets are in a tizzy as to whether the Federal Reserve will begin lifting interest rates in September or December, but China's surprise yuan tactics have caused some experts to reconsider the central bank's timing.
Paul, who ran for president as a Republican in 2008 and 2012, warned that a rapidly slowing Chinese economy adds just another headwind for an already struggling U.S. economy.
"I think there's going to be enough problems existing, whether it's the Chinese precipitating some crisis, or whether it's our economy breaking down," he said.
Paul hints that the Fed is too scared to raise interest rates in the middle of an already weak recovery and risk sending the U.S. economy back into recession, or worse, CNBC reported.
"They're terrified of 1937," said Paul, who has long called for a "day of reckoning" that will lead to the collapse of both the fixed income and equity markets, CNBC reported
Yellen "does not want to be responsible for the depression that I think we've been in the midst of all along," Paul said.
The Fed has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.
Meanwhile, Steve Forbes, editor-in-chief of Forbes Media, tells Newsmax TV that Fed should move quickly.
"When the Fed allows rates to rise you're going to see the beginnings of the credit markets in this country working again," Forbes told Newsmax TV's "The Hard Line" program.
"Small and new businesses are having a very difficult time with regulations, which make bank loans very expensive for small businesses."
Thus these companies aren't receiving much in the way of loans, especially from community banks, which are "getting crushed by regulations," Forbes said.
"What you have is a situation where . . . big companies are doing well, the government is doing well in terms of borrowing. But the people who are the innovators, the job creators, which come from small businesses, they're suffering in this environment."
So rising rates can help job creators, Forbes maintains.
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